“Traffic lights on a post near Wall Street” by Roberto Júnior on Unsplash

The next big wave of blockchain technology usage is the tokenization of assets. What does this mean?

Tokenization is turning a real asset, house, car, financial security into a digital asset by issuing tokens that represent ownership in a compliant manner.

Why is this beneficial? Tokenization makes the issuance and trading of assets more efficient by cutting out the middle person. This cuts out administrative fees, cuts down the time of issuance (getting rid of timely IPOs), and most importantly opens the availability of capital for issuers.

Markets thrive on efficiency and tokenizing assets make the process more efficient!

So how do you tokenize an asset? SIMPLE!

Find an Issuance Platform

List of Issuance Platforms:

Securitize

Harbor

Coinlist

Polymath

Tokeny

Swarm

Templum

Securrency

TrustToken (pre-sale)

LAToken (pre-sale)

The tokens will be created using various protocols. Most of these protocols will extend the functionality of ERC20 tokens to allow for developers to add third-party apps to the protocols.

These apps can make tasks such as issuing dividends, voting, and other important tasks associated with owning assets automated and more efficient.

So let’s say that I want to tokenize a house. I will go to one of the issuance platforms and issue a Security Token Offering (STO). Similar to an ICO for utility tokens.

HOLD UP!

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Whats the difference between a utility token and security token again?

Utility token gives access to a product or network. Whereas a security token represents actual ownership in an asset.

If I go to Chuck E. Cheese then buying arcade coins would be an example of utility tokens because it allows me to play the arcade game. Instead a security token would be a coin that actually represents a partial ownership of the arcade game.

I personally think security tokens are going to be huge because they are backed by real assets instead of the pure hype that ICOs were based on.

Can’t wait to watch the tokenization of the future unfold!

Let me know if you have any questions or see any faults! Would love to hear from you!

Follow me on Twitter @JakeParrish20

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